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QUESTION 1 (a) Accountability is discharged when government stores have been: 1. Consumed in the course of public business and records are available to show that the government stores have been used for the purpose for which the goods were required for. The stores are worn out in the normal course of public business and deletion from the accounts has been approved by the Minister and they have been disposed of in accordance with the Minister’s direction and what has been prescribed for disposal of stores under the Public Procurement Act. The stores are lost, destroyed or rendered unserviceable other than by fair wear and tear, and if deletion from the accounts has been approved by parliament.
1. Identify all activities that already generate revenue. 2. 3. 4. Identify all activities that have the potential to generate revenue. Estimate the frequency of these activities and calculate the revenue arising from these activities. Produce a monthly forecast identifying when revenue flows are projected to take place.
1. Take into consideration the government’s macro-economic framework, government resources and priorities, and any ceilings approved by Cabinet. 2. 3. 4. 5. Prepare a strategic plan which shall include a definition of the department’s mission, goals, objectives, outputs and activities. Cost and prioritises the activities of the department taking into consideration the resource ceiling. Prepare the budget statement in accordance with the FAR instructions. Prepare cash forecast identifying when expenditure outflow is projected to take place.
Challenges facing the DACF administration. Lack of transparency in determining what goes into the DACF. Since the inception of the DACF, the Minister of Local Government has not issued guidelines to MMDAs on the utilization of the fund. The constitutional obligation on Parliament to make provisions for the allocation of not less than 5% of total revenues of Ghana into the DACF seems unfulfilled. 1
compliance and avoidance of gross extravagance. However. A portion of the DACF is used to fund some activities of the Regional Coordinating Councils who do not qualify under the constitution.794 305. Parliament therefore requires the Auditor-General to perform its oversight function over the executive use of public resources.794 2 . Delays in the release of the DACF to the districts on time for the necessary developmental projects to be carried out. After approval of budget by District Assemblies. Misuse of the part of the allocation to the MPs for political gains instead of development projects. Article 187 (6) of the Constitution enjoins Parliament first to debate the report of the Auditor-General. and second. This committee in parliament examines the Auditor-General’s report together with the Public Accounts in detail and sort ‘grill’ departmental heads on financial authorization. thereby seriously undermining the development programmes of the MMDAs. the committee does not seem to have power to surcharge or dismiss but it can question and reprimand and direct the implementation of recommendations by the Auditor-General. QUESTION 2 Department of Parks and Gardens Balance Sheet as at 31st December 2009 GH¢ Assets Current Assets Cash/Bank balance Represented by Accumulated fund 305.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 The DACF has encountered what is called “statutory deductions” from the fund yearly. to appoint where necessary. These deductions are used to fund bulk purchases and other programmes of Central Government. (e) Public Accounts Committee For completeness. as such “tough skinned” public officials are not perturbed by their activities. a committee to deal with any matters arising from its study of the report. the ministry authorizes deductions from their DACF allocations without notification whatsoever. in the public interest. invariably.
895 1.528 305.580 11.004 262.266 245.632 200 17.572.024 GH¢ 16.525 60.560 258.050 3 GH¢ 258.560 2.905 1.006 697 18.034 286.024 286.034 Development Partner Support 286.092 262.030.286.422 329.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 Department of Parks and Gardens Receipt and Payment Account for the year ended 31st December 2009 GH¢ RECEIPTS GOG Funds 2.024 286.095 160.327.101 2.538 2.594 PAYMENTS Personnel emoluments Administrative expense Service Activity expense Investment Activity expense Project (DF) Development partner support Excess of Receipt over payment Accumulated Fund Balance b/f Surplus of receipt over expenditure Balance b/d Workings (1) GOG Funds (Revenue/Receipts) Personnel emolument Administrative expenses Service activity expense Investment activity expense (2) Development partner support Expenditure (1) (2) Personnel Emolument Administrative Expense Telecommunication Postal charges Office accommodation Clearing materials Servicing Office supplies Refreshment GH¢258.286.794 .683 14.479.066 245.
581 6.029 7.141 9.070 11.895 GH¢ 39.577 11.320 15.531 6.073 33.650 30.559 260 5.418 5.345 50.076 13.276 2.337 262.095 4 (4) .310 20.200 900 2.638 5.730 559 257 13.030.096 15.446 1.092 13.345 581.006 10.360 380 162.304 71.345 12.407 1.964 197.100 12. build repairs General equipment repairs Office build repairs Car maintenance allowance Medical expense Other allowances Insurance/compensation Electrical repairs Overtime allowance Salary top-up Commissioners allowance Plant and machinery repairs Fixture and filling maintenance (3) Service Activity Commissioners allowance Hire of venue Hotel accommodation Recruitment expenses Refreshment Workshops/meeting expenses Staff development Training materials Local consultancy fees Stationery Contract printing Contract photocopying Purchase of publication Local travel COA Fuel/lubricant Foreign travel expenses Other expenses Investment Activity Plant and equipment Motor vehicles Furniture and fittings Rehabilitation of vehicle Computers and accessories Other assets 7.674 37.266 12.515 36.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 Purchase of publication Vehicle maintenance Fuel lubricant Running cost of official vehicle Travel allowance Res.342 29.053 437 286.267 8.
including patented processes. Article 177 of the 1992 constitution states that funds will be voted by parliament into public funds which will be used for unforeseen events. experiment. to identify their characteristics. 3. floods and other calamities. 4. (c) 1. The government is constitutionally provided with a means of financing unforeseen contingencies without recourse to parliament. (ii) Conditions for the use of Two-Stage Tendering 1. Better supervision and control is ensured. Where the procurement entity seeks to enter into a contract for research. etc. 2. 5 . except where the contract includes the production of goods in sufficient quantities to establish their commercial viability or to recover research and development costs. This is known as the …. works or services to be procured. specialized talents not available elsewhere. study or development. (b) Contingency Fund It is a fund established by the government for an urgent or unforeseen need for expenditure for which no other provision exists to meet the need. Stocks may be checked with greater care. which had not been budgeted for in the budget estimate. in the case of services. Only source available to do specific work. Small stocks are required at the MDA levels and overall capital tied up is reduced. 3. Specialized and expert staff can be concentrated in one department. works or services are available only from a limited number of suppliers or contractors. A number of departmental stores inevitably lead to higher stock holding cost.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 QUESTION 3 (a) (i) Conditions for the use of Single Source Procurement 1. security hazards. This fund is under the express authority of the President exercised through a committee of parliament. If the time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of the goods. This fund was established in the 1961 constitution under the first republic. 5. If goods. Where it is not feasible for the procurement entity to formulate detailed specifications for the goods or works or. 2. 2.. Clerical costs are reduced because of centralization of stores records.
QUESTION 4 (a) Objectives of a Budgetary Control System 1. Authorisation A budget may act as a formal authorisation to a manager to spend a given amount on specified activities. 2. 3. based on forecast. It results in fewer obsolete articles. 6 . however. 5. it must be appreciated that over-strict enforcement would not be in the best interest of the business. If this is applied to an operating budget. Some parts of all budgets are. Causes of failure to meet revenue targets 1. therefore. which do not meet budget. Planning Planning is an attempt to shape the future by a conscious attempt to affect those factors. Forecasting Forecasting refers to the prediction of events over which little or no control is exercised. Management attention is drawn to areas. Control A budget enhances management’s ability of manage “by exception”. 7. 2. 4. (d) Bulk buying is facilitated as purchase requisitions are made out by the concerns as a unit and not on a departmental basis. 4. Improper records keeping by the Tax Payers Lack of motivation Revenue collection agencies not integrated difficulty in locating Tax Payers in the informal sector Lack of logistics for tax collection Lack of training or revenue collecting officers. 7.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 6. Budget figures may also be used by one part of an organization to forecast the likely impact on its of the activities of other parts. which are open to influence and control. 3. 6. Corruption on the part of the staff of the revenue collecting Agencies.
7 . 6. The Central Government budget cycle starts around May/June each year. They also ensure co-ordination between managers of sub-units so that each is aware of the others’ requirements. Stages 1. 7. MOFEP shall issue Budget guidelines pertaining to the budget calendar. 5. other medium term documents for the nation. Determination of sectoral ceilings. Issue of Budget Circulars to all MDA’s Carrying out public expenditure survey. (b) The Budget Cycle A budget begins with agency requests sent to higher levels of the government administration. 9. Evaluation The performance of mangers and organizational units is often evaluated by reference to budgetary standard (which may be the only quantitative reference points available). 3. Head of Budget development unit (BDU) of the MOFEP compiles. reviews and updates the list of MDA beneficiaries. Communications and Co-ordination Budgets communicate plans to managers responsible for carrying them out. Workshop involving all MDAs to review GPRS. After the approval of the ceilings. The way in which performance is evaluated will influence how a manager behaves in the future. Holding cross Sectoral meetings and policy hearings. MOFEP sets MDA ceilings and sends to Cabinet for review and approval.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 5. The Budget cycle comprises a range of products and processes which feed into and flow from the Budget. 4. Tax Revenue Estimates with the Revenue collecting Agencies. Motivation Budgets are often intended to motivate managers to work to a target (ie in line with organizational objectives). The Government Agency’s preparation and executive compilation may begin several months before the spending year begins. 2. National Policy review workshop and intra sectoral meetings report submitted to the MOFEP. These requests often include justification and timelines for spending based on economic demographic forecast. 6. 8. 7.
Low Revenue Mobilization: The revenue or tax net does not encapsulate all taxable enterprise and individuals. 8 2) 3) 4) 5) 6) . grants and aid to finance ineffective programmes. low investment. then Parliament will approve the budget. 14. After the debate. Ineffective Financial Management: since budgetary projects in developing countries are not reliable. management also tend to be ineffective and this leads to demand for loans. A date is fixed for the budget to be tabled before parliament by the Finance Minister. After Finance Minister’s presentation parliament will debate the budget. 13. This happens when there is the realization that private sector activities as well as traditional monetary policies prove inadequate in restoring economic stability. Besides the unpredictable economic and social environment. etc). After cabinet review and final approval issue to MOFEP. 11. QUESTION 5 (a) 1) Causes of Deficit Financing During a Period of Depression: Deficit financing assume greater importance when there is the need to recover after a major depression or to reduce the severity of the business cycle. During Wars: Governments try to raise additional resources to finance tribal conflicts during tribal wars. 12. Weak Expenditure Control and Monitoring: The annual accounts are usually in arrears in such a way that year by year comparison is difficult. MDA Budget Committee will submit MDA budget proposal for defence. After MDA defence MOFEP shall put together the entire national budget for Cabinet approval. Revenue from taxes therefore tends to be less than what is needed for payments of goods and services and other government current financial obligations. When economic activities are declining or stagnant deficit financing may replace deficiency in aggregate demand by injecting funds and providing the necessary stimulant for reducing under utilization of resources and increase the deployment of labour and capital through additional spending to finance the budget deficit. During a Process of Economic Development : Usually in developing countries deficit financing is applied to cater for the meager voluntary investment in order to progress rapid development to do away with the vicious circle of poverty (low savings. This may however have negative effects on inflation etc. low income. 15. government may incur expenditure outside the budget which necessitates the inflow of budget expenditure in excess of expected revenue.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 10.
Because of the inefficiencies associated with incremental budgeting. It is recognized that it is an inefficient form of budgeting. Once an item appears on the budget its inclusion in future budgets are taken for granted. It is a survey carried out as a means to improve public expenditure control and benefit to the state. Lack of synchronization the revenue and expansion. Management considers limited increases rather than focusing on major pragmatic concerns. Similarly the lecture focuses on individual expenditure rather than “the big picture”. It is country wide approach of looking at the effect of past expenditures. It is normally carried out by a committee set up by the Minister of Finance. In this approach managers do not consider weather a particular item is still necessary. (ii) Incremental Budgeting (IB) The term incremental budgeting is usually used to describe the traditional approach of setting a budget which is based on the current year’s results plus an extra amount for estimated growth or anticipated rate of inflation in the coming year. there are attempts to implement policies (not budgeted for) in order to earn political integrity. This traditional incremental budgeting will be sufficient only if current operations are as effective. (i) Public Expenditure Survey 8) (b) It is a concept that has often preceded the preparation of Government budget. efficient and economical as they can be without any alternative courses of action available to the organization. This traditional approach to budgeting encourages work to be done on activity level and assessment of operational activities for the coming year. It is the annual review of public expenditure plans undertaken by Central Government and examining the impact of the various expenses on the nation. The planning process should take account of alternative options and look for ways of improving performance.K. This originated from Committee Report in U. In this approach. policy makers with a given situation (eg last year) as a base and make only marginal revision or adjustments for the current year. zero base budgeting was therefore designed to get rid of this type of budgeting.SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 7) Political Pressure: Politicians make electioneering promises which have not been budgeted for. public expenditure survey should be carried out to assess the impact and benefit of the government expenditure (PESC). because it encourages slack and wasteful spending also creeps into budgets. From budget preparation point of view it is fairly easy for Accountants or Administrators. When political pressure becomes unbearable. in 1961 that for efficient use of government resources. These create extra burden needing extra funds to finance outside the budget. 9 . There is no prioritization.
The Bill is to be prepared annually and laid before Parliament at least one month before the end of the financial year subsequent to which the estimates relate. 10 .SOLUTION PUBLIC SECTOR ACCOUNTING MAY 2010 (iii) Appropriation Bill Article 179 (2) of the 1992 Constitution provides that the estimates of the expenditure of all Public Offices and Corporations with the exception of those set up as commercial ventures shall be classified under Programmes and Activities and be included in an Appropriation Bill. Once a Bill is approved by parliament. An Appropriation Bill provides for the issue from the Consolidated Fund or any other fund of the sums of money required to meet the expenditure. It is a means of seeking Parliamentary approval for the funding of Public Programmes and Activities. it becomes an Appropriation Act which then sets the limit of the amounts to be disbursed from the consolidated fund.
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